The Rest of The Retention Story – Part 2
We’ll never make much progress solving the retention problem until we get rid of the myopic and wrong-headed metrics used by most direct response fundraisers to measure ‘success’.
One reason for the mistaken use of myopic metrics stems from a fundamental misunderstanding of the term ‘attribution’. In reality it means assigning results or performance to various actions or sources. As in, what factors — message, donor service, communications, thank you’s, donor recognition, frequency , etc — contribute in what proportional way to increasing or decreasing the Lifetime Value of a donor base.
The online silo battles it out with the direct mail silo, arguing that their great work is a major attribution to the organization’s multi-channel efforts.
Meanwhile, the major gift silo largely ignores the other two, believing that direct mail and online activities are mere noise, not substantive signal, when it comes to their big gift program.
Here’s where the problem with retention begins. Even though, as I pointed out in my Part 1 post, when it comes to improving Lifetime Value — the only true long-term metric that matters — the tactics/techniques/frequency of activity from the fundraising department accounts for less than 20% of the ultimate value on a donor file.
Despite this, fundraisers and their consultants insist on attributing results and value in a campaign-by-campaign transactional approach. “Yay, the October appeal was gangbusters, guess our great RFM select was the reason for its success.”
Meanwhile, important, ongoing activities that add real and lasting value (proper “thank you” and “welcome” programs … donor-centric newsletters … extraordinary donor service and donor experiences) are discounted or ignored. This is why single campaign activities like appeals, and renewal notices are overvalued.
As a result of this misplaced metric mindset, no activity, no department and certainly no combination of these is held accountable for its positive or negative impact on retention.
To put it another way, the current approach to ‘attribution’ radically skews value by only focusing on a tiny handful of organizational actions (e.g., the email and direct mail appeal for Campaign X), and further biases everything towards short-term campaign metrics and away from retention by evaluating the impact on response rate or dollars raised for Campaign X.
Did the well-constructed thank you letter to donors of the appeal that preceded Campaign X have no impact on their subsequent decision to give to Campaign X?
And what about the massive segment of non-responders to Campaign X? What if it can be shown that the thank you message previously used actually hurt retention and subsequent giving by the non-responders? What about negative attribution for crushing retention and lifetime value to the same two teams – online and direct mail in this case – clamoring for credit?
All of which I hope will get you thinking about the collective actions your organization takes that will determine whether your donors stay or go.
You can get a brief and graphic illustration of how the attribution process should work by checking out this short Retention Quiz and Screencast prepared by the folks at DonorVoice.
Do you know whether your messages harm or help lifetime value? How about your magazine or newsletters? Harmful or helpful where lifetime value is concerned. Should the person who wrote that great ‘Thank You’ and ‘Welcome’ series be rewarded for improving retention rates and response on Campaign X that followed?
What are the attribution practices in your organization?
P.S. In Part 3 I’ll cover why RFM and other transactional targeting is so misplaced when it comes to retention. Why the end result is, well, a dead end … somewhat equivalent to the proverbial dog catching the car.